International Trade and the Onset and Escalation of Interstate Conflict: More to Fight About, or More Reasons Not to Fight?

Abstract

Though study of the relationship between international trade and militarized conflict has become more sophisticated, whether trade reduces the chance of conflict, exacerbates it, or has no effect, remains contested. This article considers two aspects of trade – volume and interdependence – and models conflict as a two-stage selection process involving dispute onset and escalation to deadly violence. This perspective leads to robust statistical findings that trade is Janus-faced, both facilitating and inhibiting conflict at different stages. I integrate expectations from schools of thought often portrayed as incompatible, providing a nuanced understanding of trade-conflict dynamics which is strongly supported in empirical tests. This supports the conclusion that a focus on international conflict as a communication process promises better theory in international relations.

Keywords: international trade, interstate conflict, militarized conflict